Holbrooke Discloses Gift of Free Lodging

By PHILIP SHENON

Published: September 15, 1998

WASHINGTON, Sept. 14—
Richard C. Holbrooke, the veteran diplomat whose nomination as chief American delegate to the United Nations has hit a snag, has amended his financial disclosure statements to reflect a gift worth more than $12,000 in lodgings from a former American Ambassador to Switzerland, Mr. Holbrooke's lawyer said today.

Clinton Administration officials said his initial failure to list the gift on his disclosure statements to the Office of Government Ethics did not pose a threat to the nomination of Mr. Holbrooke, the architect of the 1995 peace agreement that ended the war in Bosnia.

Today President Clinton again voiced support for the nomination. ''I hope, if we can overcome the inertia of Congress, he will soon be a member of the team again,'' Mr. Clinton in a speech in New York to an audience that included Mr. Holbrooke.

Still, the relationship between Mr. Holbrooke and the former Ambassador, the late M. Larry Lawrence, may prove to be an obstacle to Mr. Holbrooke's nomination to the United Nations post.

Mr. Holbrooke, the former Ambassador to Germany, lived in the Washington home of Mr. Lawrence and his wife, Shelia, for more than a year after he returned from Germany in 1994 to take up the post of Assistant Secretary of State for European and Canadian Affairs. The Lawrences, who were then in Switzerland, did not charge Mr. Holbrooke rent.

Administration officials said State Department investigators were studying the relationship between the two men as part of a larger, previously disclosed investigation by the State and Justice Departments of Mr. Holbrooke's financial disclosure statements and his contacts with former State Department colleagues after leaving the department two years ago.

The officials acknowledge that as a result of the investigations, Mr. Holbrooke's nomination will not be considered by the Senate until at least early next year.

Mr. Lawrence gained notoriety after his death in 1996 when it was discovered that he had fabricated a heroic World War II military record that had, with Mr. Holbrooke's support, allowed him to be buried at Arlington National Cemetery. His remains were exhumed last year as a result of the controversy.

An adviser to Mr. Holbrooke, speaking on condition that he not be identified, said that the investigators may be studying whether Mr. Lawrence, while Ambassador to Switzerland, helped Mr. Holbrooke obtain his current job as vice chairman of Credit Suisse First Boston, the investment banking company controlled by Credit Suisse, the giant Swiss bank. The adviser said that in fact Mr. Lawrence ''had nothing to do'' with Mr. Holbrooke's employment.

At the urging of his lawyer, friends said today, Mr. Holbrooke has in recent weeks filed a revised 1996 financial disclosure statement to reflect the use of the home as a gift, valued at $1,000 a month. ''Mr. Holbrooke has amended his forms to reflect his stay in the Lawrence home as a gift,'' said his lawyer, Richard I. Beattie. ''And this is no longer a significant issue for the investigation.''

The adviser to Mr. Holbrooke said that Mr. Holbrooke had been careful throughout his stay in the Lawrence home to reimburse Mr. Lawrence for groceries, telephone calls and a household maid.

''He even paid the social security for the housekeeper,'' the adviser said. ''He only used one room of the house. He was very careful about all of this.''

He said that Mr. Holbrooke prepared his disclosure statements in 1996 with the help of an accountant, and that the accountant had not felt the need to list the use of the house as a gift.

When Mr. Beattie reviewed the financial disclosure statements in recent weeks in preparation for Mr. Holbrooke's confirmation hearings in the Senate, the adviser said, the lawyer ''respectfully disagreed'' with the decision not to declare the use of the house as a gift, and the disclosure statements were amended and filed with the Office of Government Ethics.

While President Clinton had intended to demonstrate support for Mr. Holbrooke today in his speech to the Council on Foreign Relations, his remarks may have done more harm than good.

His remark about ''the inertia of the Congress'' drew an angry response from Senator Jesse Helms, the North Carolina Republican who is chairman of the Foreign Relations Committee, which would review the nomination.

''We fail to see how 'inertia in Congress' is to blame for keeping Mr. Holbrooke from the U.N. post,'' Mr. Helms's spokesman, Mark Thiessen, said in a statement. ''President Clinton never actually nominated Mr. Holbrooke to the U.N. post, and failed last week to meet a Sept. 10 deadline for getting his paperwork to the Foreign Relations Committee. The Foreign Relations Committee cannot act on a nomination that the President has not sent up to us.''

''But then we shouldn't be surprised,'' he said. ''It's par for the course for this Administration to blame all of its troubles on someone else.''